Simple and Fairer Alternatives to Council Tax

Coniston, Pastel Pine

Most people in England know council tax as the local charge on homes, usually set by how much your property was worth decades ago. It pays for services like rubbish collection, police, fire, and schools. Still, many complain it feels unfair, especially if neighbours in similar homes pay wildly different amounts or if a property’s value band is wrong.

The rules can get confusing too, with lots of paperwork and odd bandings that don’t always match today’s market. It’s no wonder more people want a simpler and fairer way for councils to collect money. This post looks at newer ideas that could make paying for local services feel less like a headache and a bit more fair for everyone.

Eligibility for council tax benefit hinges on several factors. But overall it’s available for low-income households, students, pensioners on lower incomes and people with disabilities.

It’s worth checking, as many people who are eligible miss out.

Many people also may qualify for council tax refunds due to paying too much, when their property was wrongly banded. Valuation Band Errors were common and in some cases, can lead to refunds of thousands of pounds.

Who Pays and Who Feels the Pinch

Council tax is a charge on nearly every household. Owners, renters, single people, and families all pay, although sometimes support or discounts help those on the lowest incomes. Yet the burden often falls hardest on people already struggling. Homeowners and renters in lower-value properties sometimes pay a high share of their income, while those in expensive homes can end up with a bill that feels too small in comparison.

Here’s a quick look at who picks up the bill:

• Homeowners and private renters: Pay the full charge, unless they qualify for help.
• Single adults: Get a 25% discount but that’s not always enough if money is tight.
• Students and some groups: Usually exempt, but (as always) the rules are complex and there’s paperwork to complete.
• Low-income households: Can claim council tax support but the amount varies by where you live, and not everyone knows they qualify.

When Valuation Bands Get Out of Date

The council tax bands are meant to group homes by value, yet the entire system is pegged to property prices from back in 1991 (or 2003 in Wales). Since then, prices have changed wildly in many areas. There are expensive homes sitting in lower bands, and modest homes that have shot up in value, still grouped with cheap properties.

Here’s how out-of-date bands play out:

• Old valuations mean some people pay less than they should, just because their home was undervalued 30 years ago.
• Rising house prices leave families in areas where values have jumped suddenly facing bigger bills, while wealthier areas sometimes dodge fair shares.
• Moving house can feel like a gamble. You might end up paying much more or less depending on the luck of your band.

The system no longer matches the real property market, which cracks the link between what you own and what you pay.

• A London property banded at Band C in 1991 that’s now worth £900,000 would pay around £1,700 council tax each year.
• Yet a Leeds property banded at Band D in the same year and is now worth £280,000 would pay around £2,000 council tax each year.
• And a property banded A in Wales in 1991 and now worth £210,000 would pay £1,400 council tax.

Confusing Benefit Rules

If you’re on a low income, elderly, or struggling, there is help—at least in theory. But the support system is so complex that many miss out. Councils set their own rules for who gets support and how much. Forms can be long and confusing. People move and suddenly face a fresh set of rules.

• Different councils, different rules: Two families with the same income can get very different amounts of help, just because they live in separate council areas.
• Short-term changes: If your income changes, so might your benefit. This adds stress and paperwork for those already worried about money.
• Lack of awareness: Some people don’t know support exists, or feel put off by the process to claim it.

Better Ways to Raise Local Funds

Winchester, Pastel Pine

Once you look past council tax, there’s a wide range of ideas for raising local funds that sound fairer, simpler, and less frustrating. Some focus on how much your home is worth today. Others link local payments to your actual income, or even invite people to pitch in with skills instead of cash.

Below are the main options getting serious attention, along with how they might work for real families, neighbours, and councils.

Annual Proportional Property Tax

Annual Proportional Property Tax charges a set percentage of each property’s current market value. This approach is often seen as clearer and more balanced than council tax bands. Households with higher-value homes pay more, while those with less expensive properties pay less.

Invented by economist Tim Leunig (who created the furlough scheme), this tax would merge council tax and stamp duty, to make one payment.

At present, a Band D home in Blackpool can pay twice as much as a home in the same band in Westminster. And stamp duty is a big bugbear that is complicated and makes buying homes expensive and complicated.

Council tax and stamp duty are terrible taxes. They are unfair and unpopular, and both should be replaced with proportional property taxes.

Council tax should be replaced by an annual tax on all houses, and stamp duty with an annual tax only on houses worth £500,000 or more. Tim Leunig

Land Value Tax

A land value tax works differently. Instead of taxing whole properties (buildings and land together), it only taxes the land the property sits on. The focus is not on how fancy or run-down the house is, but on the plot of land and its location.

The big advantage is that you can’t hide or undervalue land in the way you can with buildings. This type of tax makes it harder for speculators to sit on empty plots and wait for prices to rise.

It also avoids the loopholes where improving or extending your home leads to higher tax—under land value tax, only the land’s value counts, not what you build on it.

Let’s say you own a patch of land in a popular city centre. Even if you leave it empty or use it as a car park, you will pay the same as your neighbour with a new house on the same size plot. In this way, it encourages people to use their land well, rather than letting it go to waste.

People find this method appealing because:

• It targets wealth locked into land, not effort or improvements.
• It can reduce wild swings in housing prices by discouraging land-hoarding.
• It is almost impossible to avoid or game the system.

Small rural plots would attract low tax, while valuable city land (even if unused) would pay the top rates.

Another advantage to this (Green Party policy by the way), is that people who second homes and leave them empty for most of the year (pricing local people out of buying their own homes, which happens say in Cornwall), will have to pay added tax. It will encourage them to either sell up, or rent the homes out. In order to pay more Land Value Tax.

Local Income Tax

A local income tax would link bills directly to how much people actually earn, not what they own or where they live. Councils would set a local rate, say between 1% and 5%, which would be added to your national income tax and passed on to fund local services.

This approach has some big positives:

• Payments rise and fall with your income. If you lose your job, you pay less. If you earn more, you pay more.
• It better matches what people can afford and removes some of the stress for those on a tight budget.
• There is less paperwork and guessing, since income data is already collected through PAYE (or yearly self-assessment for the self-employed).

However, it is not perfect. High earners in some areas could end up paying much more for the same local services, which may feel unfair to them. Councils in poorer regions could find it tough to raise enough money, unless the government steps in to balance things out.

Community Contribution Models

Not every idea for raising funds depends on taxing income or property. Some communities have tried set local fees, where every adult pays a flat amount each year, sometimes called a “Poll Tax Lite” or community charge.

If the word ‘poll tax’ makes you balk, know this is not the same thing. The Poll Tax was introduced by Margaret Thatcher’s  government, essentially a fixed tax where a millionaire paid the same as a binman. The resulting riots led to her eventual resignation.

To avoid hitting the lowest earners hardest, there are ways to soften the blow—such as reducing the fee for those on the lowest incomes, or letting people volunteer time for credit in place of cash.

Real world examples include:

• Local membership fees for parks, libraries, or resident groups.
• Schemes where those struggling can do one or two days’ volunteering each year (litter picking, helping at community events, or keeping green spaces tidy) instead of paying the full fee.
• Businesses or landlords chipping in a higher amount than individual residents.

This sort of model helps build local trust and makes it clear what people are paying for. While it cannot raise huge sums compared to council tax, it gives communities more of a say in how their area is funded and run.

Social Impact Bonds for Local Needs

This final idea is not a tax at all, but it offers councils another tool to ease local funding pressure. With social impact bonds, investors put up the money for a specific local project—say, helping rough sleepers or improving parks. If the project meets its goals (measured by agreed results), the council repays the investors, often with a small return.

For example, a group of investors fund an after-school programme to tackle youth crime. If crime drops as planned, the council pays them back from the savings made in police and emergency costs. If not, the investors stand the loss, not the local taxpayers.

This approach can:

• Ease the short-term strain on council budgets.
• Bring in private funding for local needs.
• Focus spending on clear, measurable results.

While social impact bonds cannot replace regular local funding, they offer an extra way for councils to try new ideas without risking taxpayer cash upfront. In this sense, they add one more string to the bow for councils looking to fund local improvements fairly.

What Would Fairer Alternatives Mean?

Brighton, Pastel Pine

The current council tax has a reputation for being anything but simple. Old property bands, confusing language, and endless paperwork can cause stress. A fairer system—like an annual property tax, land value tax, or local income tax—could strip away much of the confusion.

Key improvements people would notice:

• Clearer bills that show exactly how charges are worked out.
• Less chance of mistakes and disputes, since values and rules are up to date.
• Fewer appeals and court letters over banding errors.
• Quicker help for those struggling, since support could fit real incomes.

Trust is hard to earn and easy to lose. When a system feels out-of-date or unfair, people start to question where their money goes and whether anyone is listening. A fairer approach can rebuild that trust.

• Greater transparency: People will see how their payment is linked to what they own or earn, not a number plucked from 1991.
• Sensible support: Help for the most vulnerable feels less random, leading to less anger and more understanding.
• Accountable councils: With clear, logical rules, councils can show they’re playing fair, which calms talk of a postcode lottery.